May 16, 2020

Technology transforming finance: the state of play in Africa

James Scott, Chief Digital Off...
5 min
The past few years have seen Africa emerge as a hotspot for innovation in financial ecosystems. For anybody, anywhere, interested in the potential of te...

The past few years have seen Africa emerge as a hotspot for innovation in financial ecosystems. For anybody, anywhere, interested in the potential of technology to transform economic infrastructure globally, Africa is where they will find the future today. In certain locations, the application of modern telecommunications, digital and mobile technologies to everyday life and commerce is exceeding that which can be found in the developed world. 

Some of this change is being forged by uniquely African factors, opportunities and challenges. We are seeing this play out in a number of different ways, from diaspora flows back onto the continent, the proliferation of mobile money and the role that corporates are playing to leveraging digital technologies to improve supply chains and connect with their customers. 

So these are exciting times for Africa indeed,  but the transformation is still very much a work in progress – so what are we currently seeing in terms of activity and focus?

Getting the user experience right

We are seeing good growth in smart phone penetration and with that a big focus on getting the customer experience right. Building and deploying products and services into consumer’s hands with the right kind of experience is a big driver for many of the various players on the continent. The underlying payment rails have evolved rapidly with mobile money and banks modernising some of their payment capabilities, that the consumers are starting to enjoy new and innovative ways of moving funds across the continent. There are a number of fintech’s entering this space, finding parts of the value chain where there are underserved client needs and are building and deploying innovative solutions into these areas. African startups are providing great solutions to real problems and this is a trend we believe will continue to scale. 

Another important trend on the continent is the role aggregators are playing given the fragmentation of services across the continent. There are market nuances, regulatory environments as well as a diverse range of market participants in African markets. Given this diversity we have seen the emergence of some very strong aggregators to start joining up the pieces, particularly in the cross-border space. With mobile money becoming so pervasive, but individual networks being different in complex ways, this aggregation factor is key to making the whole landscape work seamlessly. We’re also starting to see these aggregation mechanisms drive stronger connectivity between the continent itself and the wider global markets.

Digitisation and technical innovation

While the UI layer is the focus of a lot of activity, this is partly due to it representing the lower-hanging fruit. Big shifts in the underlying mechanisms to move money has been much slower, but the promise and maturing of Blockchain technology as well as the continents natural drive to leverage new and modern technologies like mobile, cloud, data and artificial intelligence will mean that this is the next trend to watch.  

We will likely see this play out in a number of areas at it relates to financial services, everything from processing mechanisms, speed of innovation, lower cost infrastructure as well as new ways of moving money and managing identity.. The latter will be a crucial ingredient as Africa’s digital ecosystem matures. A lot of the issues that organisations face moving funds into and around Africa relate to transparency, the difficulty of tracking money and ensuring funds are received by the appropriate beneficiary and used accordingly and the benefits of many of these digital solutions will start to address this. 

Each of the emerging technologies provide the continent with unique opportunities and we are seeing great momentum from some regulators in different markets. Blockchain and the successful pilot of this technology in South Africa, as well as the recent announcement of a regulatory sandbox for Fintech collaboration in South Africa are good examples of many of the participants in the market looking to experiment and support growth of this sector. Big data and the opportunity this provides banks, corporates as well as fintech’s is another area we are seeing great prospects for innovation. 


All hands on deck

All of these moving parts amount to the creation of a whole new ecosystem – no one single provider or part of the market can square the whole circle. Collaboration and network-forming is the order of the day. While there is understandably a lot of focus on the smaller fintech disruptors, incumbents such as traditional bank and regulator’s are also very keen to get involved. Some of the regulatory shifts in Europe have accelerated open banking and while this is not regulatory driven in Africa, we are seeing many players start to look at opening up API’s which will become a big catalyst for innovation and new business model development. 

Big foreign institutions are also eager to be involved, and not just financial ones – given the centrality of online and mobile to these new systems, big tech companies can also see opportunity. This is an exciting time for the continent and as always Africa has the potential to accelerate its development in this space. 


For more information on all topics for FinTech, please take a look at the latest edition of FinTech magazine.

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Apr 29, 2021

Stripe backs Step - the digital bank for teens

Joanna England
3 min
Stripe backs Step - the digital bank for teens
Payments giant Stripe continues it's startup investment streak and has also announced plans to acquire tax software fintech, TaxJar...

The digital payment solutions giant, Stripe, has re-invested in the San Francisco-based teen banking fintech startup, Step. 

The Series C round raised US$100m in capital from a number of backers, including Coatue, TikTok star Charli D’Amelio, actor Jared Leto, and Will Smith’s Dreamers VC, for the enterprise. 

Step provides a free FDIC-insured bank account and Visa card to teenagers. The accounts are backed by Evolve Bank and there is no subscription charge for its usage. Users don’t pay for their accounts and there are also no overdraft fees. 

The mobile banking app enables parents to set controls and limits on spending and encourage responsible finances. According to data released by the company, 88% of the platform’s users say this is their first bank account. 

Big backers

To date, Step has seen great success in the marketplace. The company has raised more than $175m from investors and now has 1.5m users.

Stripe, which was founded by Irish brothers Patrick and John Collison, previously led Step’s $22.5m Series A round in 2019.

Step's Series B funding round also brought in $50m, and has a distinctly celeb-tinged reputation with investors including Justin Timberlake and the pop duo The Chainsmokers.

Users get access to a free, FDIC-backed bank account, a spending card and P2P payments platform to send and receive money instantly.

CJ MacDonald, chief executive of Step, said the company is aiming to improve the financial futures of the next generation. “Step is the only banking platform that enables teens to start building a positive credit history before they turn 18 and does not charge fees of any kind.

He has previously spoken about the importance of financial literacy for young people. “Money is just one of those things where I think the more educated and equipped you are early, the better decisions you can make down the road,” he told PYMNTS. “And you can also prevent yourself from making costly mistakes. I mean, the average American doesn't have $400 in emergency savings and pays $350 a year in banking fees. If we can help this next generation just ultimately be smarter and more educated as it pertains to money, I think we'll all be better off.”

Kyle Doherty, managing director at General Catalyst and Step board member, explained, “Gen Z is flocking to modern financial solutions that can be easily embedded within their digital lives and Step has a unique model for how to do this right.”

TaxJar acquisition

The news follows on from Stripe’s recent announcement that it plans to acquire TaxJar. The fintech, which builds software for online businesses that automates the reporting and filing of sales taxes, will most likely be integrated with Stripe’s billing services.

Currently, No terms have been disclosed but the Boston start-up had raised more than $60m from investors including Insight Partners.

Stripe chief financial officer Dhivya Suryadevara said of the move, “With TaxJar, we will help millions of internet businesses running on Stripe with their sales tax and make it easier for them to sell internationally.”

Stripe also recently closed a $600m funding round that valued the TaxJar at $95bn and has been investing heavily in fintech startups, including Ramp and Check

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